How can retail brands maintain a competitive edge in the face of economic challenges and growing competition?
In this report, we’ll review the biggest trends influencing the retail industry this year and beyond, plus how to action these insights. We'll cover:
- Trend #1: Shrinkflation is being called out in a major way
- Trend #2: Consumers are embracing AI-driven convenience
- Trend #3: In-store surveillance is causing frustration
- Trend #4: Automation in customer service polarizes consumers
- Trend #5: Sustainability conversation grows amid ‘deinfluencing’ comeback
Methodology: We analyzed English-language mentions worldwide using Brandwatch Consumer Research.
Trend #1: Shrinkflation is being called out in a major way
It’s no secret that the rising cost of living has been having a huge impact on consumers in recent years, but we’re starting to see conversation on the topic reach fever pitch.
Looking at online conversation between January 2023 and April 2024 around keywords like “can’t afford” and “too expensive”, we found millions of mentions.
Rent was the biggest topic (1.9 million mentions), followed by food (1.5m mentions) and gas (800k mentions).
The cost of groceries was one of the topics we saw growing in that time. We tracked 187.5k mentions of groceries between October 15, 2023 and April 15, 2024, up 14% from the previous six-month period.
Amid those mentions we found plenty of consumers calling out how groceries are getting more expensive. We even found people doing in-store walkthroughs, pointing out how prices have inflated in a short period of time.
Beyond rising prices, the term “shrinkflation” has become a huge part of the discourse around grocery shopping.
In the six months between October 15, 2023 and April 15, 2024, mentions around shrinkflation were up 112%, generating hundreds of thousands of mentions. Google searches for the term have become more popular recently too.
Shrinkflation in popular products hasn’t gone unnoticed by consumers, who are happy to share examples they encounter in the wild.
Besides shrinking packages, consumers also shared photos of products that don’t match the number of portions stated on the packaging, and some of them suggested that the portions proposed on the packaging are unrealistic or simply wrong.
"It doesn’t surprise me to see Shrinkflation becoming a hot topic. Tracking ‘value for money’ mentions in media coverage is always a good idea for retailers, not only to track their own performance in this category but also to keep an eye on how competitors are addressing this topic through their PR efforts."
Advice to retail brands
Retailers selling items that have reduced size or increased price should expect pushback from consumers on social and in store. Building this into crisis management planning (for example, setting up monitoring around packaging, pricing, and other related keywords) can help brand teams keep track of the conversation. Meanwhile, ensuring any in-store signage or own-brand packaging is up to date can help avoid consumers feeling cheated or misled and broadcasting grievances online.
Trend #2: Consumers are embracing AI-driven convenience
We collected five years’ worth of mentions of AI in conversations about shopping, e-commerce, and retail, finding they’ve grown significantly in late 2023 and early 2024.
Between October 15, 2023 and April 15, 2024, we tracked 262k mentions, an increase of 27% compared to the previous six months. A quick emotion analysis showed that of all emotion-categorized mentions, ‘joy’ was the most prominent emotion. As we’ll see, there’s a lot to be positive about.
Personalization is a key theme in these conversations, up 67% in the same comparison period, reflecting a growing demand for personalization that can make the shopping experience more convenient, saving consumers time and stress.
Other researchers have also noted this too – a recent US-based study on customer experience found that 81% of consumers prefer shopping with brands that offer a personalized experience.
We found consumers complaining about issues with the current shopping experience that AI could help solve. Consumers also spoke favorably about their AI-influenced shopping experiences, specifically mentioning receiving accurate, personalized product recommendations.
It’s clear that many consumers are open to the idea of using AI for more convenience and efficiency, and we’re seeing AI drive all kinds of innovation in the retail sector.
A good example comes from the grocery delivery brand Instacart. Instacart’s AI-powered smart grocery carts, Capers Carts, gamify the in-store shopping experience, offering personalized and dynamic recommendations into the physical aisle.
Innovation in retail is touching other sectors, too – including technology and entertainment. We've seen AI appear in conversations around ‘shoppable TV’ which enables viewers to seamlessly shop what they’re seeing on the TV screen. This essentially narrows the gap between consumer and store, again creating a more convenient experience.
Advice to retail brands
We’re seeing that consumers are embracing AI in retail when it makes their lives easier or creates a more enjoyable experience – they’re even sharing ideas about how AI could create further innovations.
Our advice is to listen. AI could be key to speeding up your customer journey, narrowing the gap between consumers experiencing your product and being able to purchase it.
Trend #3: In-store surveillance is causing frustration
In recent years, the rise in shoplifting has become a big problem for the retail sector. Based on a US study, stores lost $121.6 billion to retail theft in 2023 and the number is projected to reach $150 billion in 2026.
Some retailers have started investing in AI-powered technology to make security improvements and combat theft, but how do consumers feel about these new measures?
Between October 15, 2023 and April 15, 2024, the topic of AI and retail theft gathered 56k mentions, and as you can see from the chart below, the conversation sparked some serious emotions online. Anger was the dominant emotion, clocking in over 7k mentions, up 108% from the previous six months.
What made consumers angry?
Many retailers are starting to implement AI through facial recognition, self-checkout systems, and AI scanning technology, and not all consumers are on board with increased surveillance.
Security concerns over invasive technology were one of the big topics mentioned in angry discussions relating to AI and retail theft.
Some consumers shared personal experiences with AI-powered checkout systems and complained about being unfairly targeted or accused of theft during the checkout process, which compromised their personal image and brand loyalty.
Other shoppers called out retailers for prioritizing profits over people, specifically in the context of replacing human jobs with AI surveillance and self-checkout.
In positive comments on social, some consumers expressed optimism about the improvement of AI retail tech over time in terms of how it can protect stores.
Advice to retail brands
AI is a powerful tool that has great potential to enhance many aspects of retail business operations. However, it should come with caution. Brands should closely monitor consumer perceptions and concerns regarding AI to make sure new solutions bring more convenience without alienating paying customers.
Retail brands must tread the line between effective loss prevention and making customers feel welcome and comfortable.
Trend #4: Automation in customer service polarizes consumers
When it comes to the topic of customer service, the conversation tends to generate large volumes of mentions. Just in the six months between October 15, 2023 and April 15, 2024, we gathered 7.35m mentions, up 9% from the previous six months.
There are several key drivers in this conversation:
Unresponsiveness of customer support: In the age of the connected customer, inability to reach customer support can be a dealbreaker.
Warning others of bad experiences: If a company’s customer service doesn’t live up to consumer expectations, many people feel personally responsible for telling others they should probably take their business elsewhere.
The extra mile pays off: On the other hand, happy customers were just as quick to praise brands on social for their excellent customer service and getting their issues resolved.
Automation polarizes consumers: When it comes to customer service automation, consumers often exhibit mixed reactions. Some embrace the potential of adding more convenience to their interactions with brands, and others highlight flaws that come with automation.
That final theme is worth delving further into.
In discussions about customer service automation, many consumers highlighted a common significant flaw: automated service systems often prove ineffective compared to human representatives.
Some consumers shared that they were unable to communicate with and be understood by AI and interactive voice response systems (IVR). And others cited AI’s inability to handle complex inquiries, wasting a lot of their time, and leading to being connected with a human customer service representative in the end.
Advice to brands
Consumers are keen to show their appreciation for brands with quick and efficient customer service. Retailers looking to stay on the good side of their customers should strive to maintain a balance between automation and human touch.
While AI and other automation systems offer great benefits, including high speed of response, they must be introduced and implemented carefully to avoid frustrating consumers. Investing in testing to ensure that consumers don’t end up in a spiral with a bot could save many a transaction.
Trend #5 Sustainability conversation grows amid ‘deinfluencing’ comeback
As consumers become more mindful of their carbon footprint, sustainability has become an important topic for retail companies.
The sustainability and retail conversation has grown over the past five years. Between October 15, 2023 and April 15, 2024, online mentions about the topic grew by 46% compared to the previous six months, rising from 1.8m mentions to 2.62m.
How do people feel about the topic of sustainability in retail?
Between October 15, 2023 – April 15, 2024, joyful discussions dominated the conversation with nearly 560k mentions. However, negative emotions like anger, disgust, sadness, and fear all saw higher volumes of mentions compared to the previous six-month period.
In those discussions, people voiced their opinions on various retail-related topics, including their shopping habits, manufacturing of goods, and packaging.
Fashion brands see a huge amount of conversation in this area.
Although many fashion brands are making efforts to prioritize sustainability, consumers demand to see more eco-friendly materials and recycling practices used.
In conversations on social media, many people advocated against the use of synthetic materials, declaring we should “stop wearing oil” and buying natural fibers and pre-owned clothes instead.
And as the most sustainable fashion practice, consumers discouraged others from buying more clothes altogether and instead, motivated them to wear the most sustainable garments – the ones they already own.
"It is crucial for all retailers, not just fashion brands, to have an ongoing CSR PR strategy running all year so that if a crisis occurs it is easy to point to existing strategies. Brands can plan for this using Brandwatch Consumer Research on industry trends, and track issues like greenwashing to know what to avoid."
Meanwhile, returns are a key theme.
Using Brandwatch Consumer Research, we ran a query gathering online discussions around product returns clocked in 380.4k mentions between October 15, 2023 and April 15, 2024, a 91% increase from the previous six months.
High volumes of mailed returns contribute to increased carbon emissions and waste, and environmentally conscious consumers were quick to point out brands’ unsustainable return policies.
As a counter measure, many retailers have implemented new return policies. Some have started charging customers for dropping off their returns with local shipping carriers, and other retailers reduced their return window.
Advice to brands
Given the increased consumer awareness and demand for eco-friendly practices, retail brands should give more thought to how they can incorporate sustainability into their strategy and operations. This may involve the use of “greener” materials, recyclable packaging, or creating recycling initiatives to promote the cause to the wider audience.
Brands should also be transparent about their sustainability efforts and initiatives and openly communicate with consumers about the steps they are taking to reduce environmental impact. Transparency can build lasting consumer trust and loyalty over time.
Of course, retailers should avoid over-promising on green initiatives. Sustainability-savvy influencers and ‘deinfluencers’ will not be forgiving.